Saturday, May 31, 2008

Robert K. Murray's Politics of Normalcy

Robert K. Murray is a good writer and this is a useful account of the Warren G. Harding administration. The subtitle refers to the "Harding-Coolidge Era" but the book is about the Harding administration with a brief final chapter about Coolidge. Coolidge is more vividly remembered than Harding because after Harding died in office minor scandals, the most famous of which was the Teapot Dome Scandal, were revealed and these tarnished Harding's image.

Murray suggests that Coolidge carried forward Harding's "normalcy" philosophy and so Harding was the more influentional of the two presidents. Arguably, Harding's "normalcy" philosophy has been carried forward through George Bush.

The scandals did not touch Harding; they were the product of two or three unfortunate appointments he had made. Ironically, Harding's cabinet appointments were among the better ones in history. They included Charles Evans Hughes (state), Herbert Hoover (commerce), Andrew W. Mellon (treasury) and Henry Wallace (agriculture; the father of President Roosevelt's Vice-President, Henry A. Wallace). However, there were several exceptions, namely, Harry M. Daugherty, an Ohio crony of Harding's who was later accused of corruption and resigned during the Coolidge administration (1924), although nothing was really proven about Daugherty. Another unfortunate appointment was Interior Secretary Albert Fall, who was responsible for the Teapot Dome scandal, which involved Harry Sinclair's Mammoth Oil bribing Fall for oil leases. Another was Charles R. Forbes, director of the Veterans' Bureau who had sold government supplies illegally and whom Harding had asked to resign as a result.

My key interest in reading this book was to try to grasp why Americans had supported Theodore Roosevelt, a left-wing Progressive Republican in 1904, then supported William Howard Taft, a conservative Progressive Republican in 1908, then supported Woodrow Wilson, a middle of the road Progressive Republican in 1912 and 1916, then reverted to what most people call conservatives--Harding in 1920, Coolidge in 1924 and Hoover in 1928.

Murray does not give an answer to this because the political vocabulary he uses is already steeped in post-World War II liberalism, but a bit of interpretation is all that is needed. Hoover was a Progressive and the question that needs to be interpreted is how two conservatives, Harding and Coolidge, got sandwiched between 30 years' worth of Republican and Democratic Progressives (Wilson being the one Democrat). The answer is that Harding and Coolidge were not conservative in the sense that the word is used to refer to the late 19th century Mugwumps or Barry Goldwater. The Mugwumps had much more in common with Goldwater than Goldwater did with Harding or Coolidge. Rather, Harding and Coolidge were rural Americans who retained some of the homespun feeling for individualism without having much concern with the ideas of laissez faire economics or individual liberty. It is evident from Murray's rich description of the 67th Congress that progressivism had long been established. Harding's goals as president revealed the same thing. His goals included increasing agricultural tariffs, improving the federal farm loan system, increasing farmers' representation on federal boards (p. 32), promotion of "business-government cooperation" (with Hoover turning the Department of Commerce into "a beehive of probusiness activity"), and shipbuilding subsidies (p. 64). The tariff that Congress passed in 1922, the Fordney-McCumber tariff, in Murray's words:

"was of dubious value...The tariff debates had rarely involved principle; there were no great clashes as in the past between high and low tariff advocates. It was simply a struggle between vested-interest-groups for economic advantage. As the New York Commercial described it: 'The tariff now represents the composite selfishness of the country.'"

With respect to subsidies to ship builders, on February 18, 1922 Harding proposed (p. 68):

"that a fund was to be created to aid private shippers in building new ships as well as in buying the existing wartime government fleet. Subsidies would be paid to private shippers on a sliding scale, depending on vessel speed and gross tonnage. Shippers were to be allowed a 10 percent annual profit, but any excess would be divided between the owners and the government until the amount of the subsidy was repaid. The estimated cost of the program was $30 million per year. In presenting this plan to Congress, Harding pointedly admonished:

'We have voiced our concern for the good fortunes of agriculture, and it is right that we should. We have long proclaimed our interest in manufacturing...But we have ignored our merchant marine. The World War revealed our weakness, our unpreparedness for defense in war, our unreadiness for self-reliance in peace...'"

However, the agricultural interests fought this proposal. As preposterous as the shipbuilding proposal sounds to me, the farm lobby's opposition sounds even more preposterous. The agricultural resistance led Harding to change his philosophy of government from a belief that the president should be hands off, to a belief that the president should lead Congress toward legislation (p. 70).

It is evident that nothing in Harding's legislative or administrative agenda were conservative in an activist sense. Rather, his notion of "normalcy" was to accept the social system that the left-wing and conservative Progressives had implemented and simply "stand pat". He had no conception that assertion of markets and reassertion of individual freedom might be preferable to the Hepburn Act or the Federal Reserve Bank. He was conservative in this sense: he wished to conserve the progressives' programs, adding just a wee bit more progressivism, but not too much. What he meant by "normalcy" was just a wee bit more government spending.

In pages 3-6 Murray makes clear that there were serious economic problems facing the nation in 1920. Wilson had failed to liquidate military supplies resulting in inefficiency and waste (p. 3). Roberts indicates that prices increased 104.5% between 1914 and 1920, a compounded annual inflation rate of more than 10%. (Note that the Federal Reserve Bank was founded in 1913.) On top of the inflation, the end of the war threw many Americans into unemployment. In February 1919 an estimated 3 million Americans were unemployed. Then, the cost of living fell by about 10% in March 1921, just when Harding was inaugurated (March 4). By May 1921 farm prices had fallen by two thirds and land values fell (p. 5). The unemployment rate was 20 percent. Interestingly, Roberts is describing an inflation/recession somewhat like the one that preceded the election of Ronald Reagan in 1980. In the late 1970s the inflation and increasing unemployment occurred together, but the situation wasn't that different. But Harding did not offer to remedy the inflation/unemployment cycle by correcting Fed policies. Rather, his normalcy policy was primarily political: to end the discussion of the League of Nations and to subsidize farmers with a tariff (p. 11), tighter immigration policy, a bigger navy, subsidies to the shipbuilders and an anti-lynching law. He also favored rationalization of government, a long-time progressive theme. Most of all, Harding advocated normalcy (quoted on p. 15):

"By 'normalcy' I don't mean the old order, but a regular, steady order of things. I mean normal procedure, the natural way, without excess."

Harding defined the Republican stance for much of the twentieth century. Republicans have called for normalcy, accepting the "progressive" reforms that the Democrats concoct and then responding to by saying that they are too much. The Republicans then call for "normalcy" and win another term in office. But is it normalcy to have a Federal Reserve Bank that prints $29 billion to subsidize an incompetent and corrupt investment bank like Bear Stearns? Is it normal for the US government to spend a trillion dollars a year? What is normal about that? Perhaps in Harding's day the normalcy theme rang true, but the Democrats' schemes, the Department of Education, inflation, the Fed, political correctness, the incompetent, "progressive" education system, the failed social security system, the failed policies of "urban renewal" that destroyed American cities and subsidized real estate developers are not normal. Is accepting such programs normalcy?

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Mitchell Langbert

About Me

I have researched and written about employee benefit issues and in my previous life was a corporate benefits administrator. I am currently associate professor of business at Brooklyn College. I hold a Ph.D. from the Columbia University Graduate School of Business, an MBA from UCLA and an AB from Sarah Lawrence College. I am working on a project involving public policy. I blog on academic and political topics.